Canada extends, broadens tax credits to aid miners

TORONTO, March 1 (Reuters) - The Canadian government
outlined plans on Sunday to extend for a year exploration tax
credits offered to miners and broaden the scope of the credits,
in an attempt to boost a sector that has been ravaged by falling
commodity prices and a scarcity of funding.

The government said it hopes the tax credit, which is aimed
at boosting exploration activity within Canada, will support
hundreds of small companies.

Canada is home to the vast majority of the world's metal and
mineral exploration companies, which have been hit hard as
copper, gold, iron ore and other commodity prices have slumped
over the last four years.

"We are extending the mineral exploration tax credit to
provide junior mining companies access to the venture capital
they need," said Finance Minister Joe Oliver on the sidelines of
the sector's largest annual show, the Prospectors and Developers
Association of Canada Convention, which got under way in Toronto
on Sunday.

Canada is extending the 15 percent tax credit for investors
in flow-through shares for an additional year, until March 31,
2016. Flow-through shares, which can only be issued to finance a
company's exploration efforts, allow early stage miners to pass
on a tax credit to investors that buy them. The government said
since 2006, the credit has helped juniors raise more than C$5.5
billion ($4.4 billion) for exploration.

Even with the tax credit however, miners have struggled to
raise funds. The latest data from research firm Oreninc shows
that cash raised from flow-through funding fell to C$373 million
in 2014 from about C$710 million in 2012, when metal prices were
much stronger.

The government also said it plans to amend the law to ensure
that costs associated with undertaking environmental studies and
community consultations, required to obtain exploration permits,
will now be eligible for treatment as exploration expenses. This
would make them deductible for tax purposes and allow miners to
also fund these costs via the issuance of flow-through shares.

Costly, lengthy and grueling environmental studies and
community consultation processes in Canada are among the factors
that have prompted many miners to bet on projects in politically
risky jurisdictions overseas in recent years.

The government said it recognizes that these costs are part
of doing business in Canada, and it hopes the moves enhance the
attractiveness of investing in Canada.
(Reporting by Euan Rocha; Editing by Cynthia Osterman)